Electronic commerce is becoming increasingly important in the world economy. The number of financial transactions that take place on the Internet is soaring. One impediment to the continued growth of electronic commerce is the lack of suitable systems which permit on-line purchasers to make purchases and which permit on-line merchants to confidently accept payment for purchases. Traditional payment systems which include exchanging paper money, cheques or coins are not practical in the on-line environment.
Credit cards may be used to make on-line payments. However, credit cards have a number of disadvantages for both consumers and merchants. These include:                not all prospective on-line purchasers have credit cards;        merchants must pay significant premiums to accept credit card payments;        in some cases credit card fees must be paid for attempted transactions, even if those transactions are not completed;        credit cards cannot be used anonymously; and,        credit card companies occasionally refuse payment to merchants after goods have been shipped or services provided;        for their own protection, merchants typically require persons who wish to pay by credit card to provide a large amount of personal information. This is invasive and can discourage some users from proceeding with transactions.        
There have been numerous attempts to create electronic payment systems which approach the liquidity, anonymity, security and ease of use that cash enjoys in the real economy. Many of these attempts have failed to gain acceptance. Each of the previous so called “electronic cash” systems has had one or more deficiencies. Some systems provide electronic cash which can be spent only for specific goods or services. Other electronic cash systems require all users to supply personal details, such as the user's name, social insurance number, bank account numbers, or the like and are not anonymous. Other systems are adapted to be useful primarily for making very small payments or very large payments. Other systems require that a merchant's computer system be integrated extensively with that of the operator of the payment system before the merchant can accept electronic payments. Other systems exist only in the on-line world. There is no way to convert electronic cash in these systems into currency that can be spent outside of the on-line environment.
A major difficulty with many prior electronic cash systems is that it is not easy to transfer funds into or out of the electronic cash system. Previous stored value electronic payment systems have used methods for adding funds to a stored value account which have significant limitations. Various schemes for adding funds have been proposed including using credit cards to transfer funds to an account or using automated clearing house (ACH) transactions. These prior systems all have disadvantages. They typically require the user to provide private information, such as bank account details to the operator of the electronic cash system.
Another major difficulty with some prior electronic cash systems is that they are susceptible to fraud. Criminals can generally find ways to use systems which permit the direct conversion of credit into spendable currency for making criminal gains.
Despite the numerous attempts to provide satisfactory systems for making payments in on-line transactions there remains a need for an easy-to-use, liquid, anonymous, recyclable, secure payment system which can be used in on-line purchases.